The Build Back Better Plan: Assessing the Sausage Making
11/1/21
By now, it seems clear that if the Democrats push the Build Back Better plan over the goal line, it’ll be with a price tag in the range of $1.75 trillion. This rendition would end up being a drastically watered-down version of the original vision.
In positioning this bill, the Democrats framed the program as one with a 10-year life and a 10-year price tag. To my mind, that orientation failed to showcase the bill in an appropriate context and allowed the bill to be perceived as being too expensive. The path forward might have been one that addressed this “affordability” issue by some combination of lower spending and more aggressive tax increases. Instead, we seem to be ending up with both lower spending and lower tax increases, as well. The bill is still being touted as one that won’t add to Federal deficits, but whether that pans out remains to be seen.
To achieve consensus within their caucus, the Democrats have scaled back spending in many areas, eliminated some features in their entirety (e.g., paid family leave), and applied sunset provisions to still others (e.g., the Refundable Child Tax Credit, which is likely to be extended only through 2022).
It’s reasonable to assume that the they are counting on the American public to demand many if not all of the features affected by sunset provisions to be re-authorized at or around their expiration dates; but with the loss of control in the next Congress, that’s hardly a sure bet. Regardless, with such sunset provisions in place, talking about the 10-year costs of this legislation makes little sense. In terms of transformational change, however, curtailing the Child Tax Credit feature may have been the most consequential forfeiture that the progressives have acquiesced to — even more so than paid family leave.
It seems that as much as $1 trillion dollars or so, have been trimmed from the price tag of this bill from this sleight of hand of imposing sunset provisions. (It’s hard to know, exactly. PBS NewsHour reported that the allocation through the end of 2022 for the Child Tax Credit stands at $200 billion, so I’m surmising that the continuation of this feature through the full ten years may likely have been on the order of $1 trillion.) From the start, the Democrats should have been more transparent about the annual costs of the bill, recognizing that future congresses would always be in the position to continue, cut back, or expand any of these programs.
The 10-year orientation likely derived from the idea of framing the Build Back Better plan as spending on “human infrastructure;” but, in fact, the distinction between physical infrastructure expenditures and human infrastructure spending happens to be a real one. The former reflects payments for things that, while having a finite life, would be paid for and done. With social infrastructure spending, on the other hand, we’re much more likely to be dealing with ongoing expenditures. The 10-year horizon is an arbitrary fiction. It would have been much more reasonable, honest, and appropriate to reflect annual costs for the Build Back Better initiatives, rather than their accumulated costs over the next 10 years.
We should be able to estimate the expected, first year cost of the current version of the Build Back Better program, by adding back the reductions from the sunset provisions to the headline $1.75 trillion cost, and then dividing the resulting, more realistic 10-year projection by 10. Doing so yields an annual cost estimate of about $275 billion. By way of comparison, the GDP of the US is over $23 trillion. Thus, we’re talking about legislation that would represent something on the order of 1.2 percent of the GDP or maybe even as much as 1.5 percent if we want to be generous. In either case, the scale of this legislation is hardly sufficient to foster the kind of transformational effect that Biden had run on (and won) and equally insufficient to put us on the path to socialism or communism as some vocal critics have hyped. In any case, assuming the current framework passes, Democrats will put the best face on it and claim a victory; but, realistically, the promise of real transformative change has largely been put off, indefinitely.
Perhaps this outcome would be more acceptable to me if I believed it to be a true reflection of the true sentiment of the American public. It seems, however, that that’s not the case. As the graphic above shows, two thirds of Americans supported this legislation before it was scaled down. My bet is that the more recent changes have more likely depressed that level of support as opposed to augmenting it. As the bill stands, it’s better than nothing, but not by much, or not for long. It’s telling, though, that despite the dramatic concessions made on the part of the Democratic progressive caucus, not a single Republican senator stands ready to separate from Mitch McConnell’s obstructionist posture, perpetuating the partisan gridlock that is so plaguing our nation. Better that they leave it to the Democrats to self-destruct than take any constructive role in improving the lives of their constituents.
